MULTI FAMILY
I'm thinking of buying a lot and building a duplex or triplex, right now I have a condo that I own for a rental paid 100,000, rent is 750 per month but it's been going up 10% a year. My question is would I be better off buying more condo's or building a duplex. I feel in this area that duplex wouldn't go up 10% like a condo because people looking to purchase base the price all on rents paid?
Are you making money on the condo? I know not many on here are going to like those numbers and it looks without factoring in other things like association dues and vacancy that it might be a break even at best? I personally like the small price and unit size of a condo out here I can but 2bdr units for $75-$90k and rent for $700 but I dont like paying the association dues..it keeps the property from cash flowing and I dont get the same type of appreciation as on other properties I own (percentage wise) ..If you can do the other deal and cash flow I would probably lean that way..Good Luck
Ugh, $750 on a 100k property seems like negative cash flow to me. My only advice is price your area and see what setup is bringing what pricing and get positive cash or you will soon be out of business.
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The responses do help but what about the equity factor of the condo going up 10% in value a year that's 10,000 a year. I put 20% percent down and my monthly with hoa's is 615 it rented within 2weeks of close of escrow. tenant signed a 1 year lease. I'm wondering if I should consider the equity factor and rise of value more than just maiking ann extra 100 hundred a month per unit on a triplex.
Are rents going up as well? The problem as I see it is that rents do not appreciate as fast as value so buying in can be risky if you can ride it out a while and have the reserves to cover any problems then you can handle it...if not a couple of months vacancy and you have problems.......Good Luck
I also have a friend who say's I shouldn't buy properties as rental's but should buy stuff flip it. I could also in this area buy a lot build a spec and flip a few a year. I'm just trying to think long term, I make about 130,000 a year but work to hard.I'm trying to figure out how to work smart not hard. I'm wondering what you guy's feel is the best way to make the money buying and renting or flipping?
[ Edited by mcq72 on Date 03/22/2004 ][ Edited by mcq72 on Date 03/22/2004 ]
"I'm wondering what you guy's feel is the best way to make the money buying and renting or flipping?"
First off, there's no easy answer to this question. Each property presents its own unique circumstances. As well, each scenario presents its own distinct advantages and disadvantages.
There are too many variables and unknowns. It's too subjective for anyone to say, "such and such is best," or vice versa.
Plus the two style of investments are as different as night and day. If you compare them to trading in the stock market, "buying and renting" is being "long" on a stock, while "buying and flipping" is akin to being a day trader.
As far as the two as REIs, there are 3 criteria and investor is seeking when buying and renting: income, equity, appreciation. For me, I only buy properties where I can acheive all three. I know others who are only interested in equity and appreciation and they break even on income. To each his own.
As for buying and flipping, it's all about immediate profit potential.
Like I said, your question is difficult to answer. It's what works for you. Not what works for everyone else.
For me, I do a bit of both. I diversify my REI portfolio, which works best for me. But each property dictates my approach. I don't know whether I'll hold or flip until I see a property and do the numbers. Even still there are a ton of other factors to consider in my decision.
Like I said, its all relative and what works for one won't always work for another.
But in the end, I say the best approach is diversification. Don't strictly do one or the other. Dabble in both.
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Thanks that help's a lot. I also wanted to know do most of you try and do the no money down or do most of you do 20% down. I guess I could get a 2nd at a little higher rate so no mortgage insurance. My credit score is 770 so I think the lenders will love me just not sure about 0 down?
[ Edited by mcq72 on Date 03/22/2004 ]
I searched yesterday and this is the only duplex I came up with 178,000 asking price 2 long term renters on a lease but the rent is only at 570 a piece, see it's ugly here taxes are 1200 a year. I think my condo' idea's are better?
Are those rents at market? If so then no you need to keep looking..........I personally have a target area and I watch (from a distance) the MLS for the area every day.....If something new comes along and the numbers are close I drive 100 miles take a look....If I like it I make an offer........not all offers are what they are asking but then I also get a lot of No's and counter offers....You have to keep looking until you find the right deal.......That duplex might be right for someone who doesnt know what to do with say $70k they just inherited so they plop it down take a much smaller first and have a small cash flow property.........does that mean it is a good deal NO.....but what it does show is that there are people who want to dabble and have money to do it........These people make great buyers when you are selling.....
Good Luck and look long and hard the deals are there.......Just not as easy to find as in other parts of the country........
B
The rents are close to market in that area, my condo gets 750 but that particular duplex is about 15 years old in a lower rent area. I wondering about mobile homes I know they don't appreciate much but i can get them for about 50-60k and they rent for about 6-650
Mobiles with land? Or in a park? Most parks in our area wont alow sublease's they dont want non owner occupied so check with any park manager first most parks have a sign saying check with them before comitting to buy in their park....Lots of money in Mobiles if you learn the system.....if you are serious I would recomend picking up a book called..."Deals on Wheels"..... Mobile prices are up in your area which makes me believe that it is the space in the park that holds the value check it out.......vacancy's in parks keep the prices more stable....when there are no park spaces available (in any park) then prices stay up.........
Good Luck
The mobiles in this area are mostly on there own land, come with usually a 1/4 to 1/2 acre, the prices are higher in my town typically 80-100K but in the next town over 50-60K
I was wondering if many of you bought land and built the 4 plexes or had a builder build them, I'm trying to get a ball park price per square foot I know it veries in area's but just trying to get an idea. I could pick up a 1/3 acre for about 35,000 if I built for 75 a square foot at a 1000 a ft each unit, I would have 335,000 into it rent is 3200 so I'm still not there for positive cash flow?(at 1% rule)